Comments on: How to fix the flatline economyhttp://blogs.reuters.com/gregg-easterbrook/2011/09/29/how-to-fix-the-flatline-economy/
Mon, 13 Oct 2014 04:50:29 +0000hourly1http://wordpress.org/?v=3.8.3By: buy fifa 15 coinshttp://blogs.reuters.com/gregg-easterbrook/2011/09/29/how-to-fix-the-flatline-economy/#comment-6144
Thu, 25 Sep 2014 20:21:09 +0000http://blogs.reuters.com/gregg-easterbrook/?p=1066#comment-6144I think this internet site has got some real superb info for everyone . “A friend might well be reckoned the masterpiece of nature.” by Ralph Waldo Emerson.
]]>By: samuel_chttp://blogs.reuters.com/gregg-easterbrook/2011/09/29/how-to-fix-the-flatline-economy/#comment-3513
Wed, 05 Oct 2011 17:02:30 +0000http://blogs.reuters.com/gregg-easterbrook/?p=1066#comment-3513The last president that gave us real numbers and asked for sacrifice was Carter. We ran him out of office and are still bashing him for it.

Obama tweaked the numbers in his favor. So has every other president since 1980. Reagan went so far as to change the way we calculate inflation to make things look better. Clinton talked about the “imaginary” budget surplus that was actually a smaller deficit than projected.

If we’d do a better job of calling our politicians on things like this at election time we’d be better off. Instead we complain when the opposition massages the numbers but ignore it when it’s our side.

EDT is correct that most states run their budgets far better than the Fed. Most of them because thier state constitutions require them too.

]]>By: samuel_chttp://blogs.reuters.com/gregg-easterbrook/2011/09/29/how-to-fix-the-flatline-economy/#comment-3512
Wed, 05 Oct 2011 16:53:11 +0000http://blogs.reuters.com/gregg-easterbrook/?p=1066#comment-3512EDT in the depression the prevailing theory was that consumer refusal to buy new things was the problem. In fact this was the beginning of manufacturing things to last just long enough to keep the cycle of purchasing going.

Anyone that doesnt’ think the consumer psychological state is a major portion of our economic recovery is not being a rational person.

Now the question should be is consumer optimism down for valid reasons or has it become a self reinforcing thing.

I think it’s still stuck down for a lot of reasons.

Debt is high, Medical Costs are eating up wages faster than they are going up, Government programs to help people are being underfunded or just turned off, Local agencies like churches and non-profits that step in to fill the gap are overwhelmed, more than 1/4 of the working age people in the economy are unemployed or underemployed, a college education is far pricier and delivers less return for the money, our government is deadlocked so badly the simplist issues are DOA, people are stuck in houses that are worth less than thier mortgages, more and more jobs at higher and higher levels are being outsourced.

The Carter years are beginning to look pretty damned good right now.

I could probably go on with valid reasons for the downturn in optimism for another paragraph or two without even trying. The consumers aren’t the ones who are wrong. The economists trying to figure out why thier model doesn’t work as expected are the wrong ones.

I was referencing arguments that have been made on both sides of this line of thought that are a little farther down the road. Spending $1 billion on a $1 million item is NEVER a good deal. They aren’t getting a suped up bridge that will last longer or allow more cars to cross at once for the $1 billion. They are getting the same bridge for 1,000 times as much money. Educate yourself on the rest. I have spent enough time on someone who calls people names and claims that they are lying simply because he can’t dispute what they are saying. Your lack of knowledge does not make me a liar. (The bridge mentioned above is a theoretical based on the inefficient manner in which government spends money. If you want some evidence of that scan back a few weeks and Mr. Easterbrook wrote about some real examples)

You couldn’t be more wrong, or put out more fallacies, or attribute a bunch of things I didn’t say to me.

First of all, did I say we need to “break windows” and fix them? Where on Earth did you come up with this nonsense? Destroying infrastructure and rebuilding it would absolutely be a waste of resources. Keynes’ money hole advocates no such thing and neither did I. Stop making up things whole cloth please.

Secondly, paying $1 billion for a $1 million bridge could make sense if the bridge lasts long enough. Have you heard of the time value of money? For goodness sakes, there are New Deal-era bridges and infrastructure still in use all over the place. Paying $1 Billion for a bridge that will provide economic benefit to people for 70 years is a no-brainer.

But beyond that, once again, you link to no facts on anything you’ve said but demand that I do the same. Where is your “PROOF” that we spent a $1 billion on a bridge that should have cost only $1 million??? Where is your proof for ANY of the wingnut b.s. you spewed about Medicare and Social Security? Can’t provide it can you?

Where to start. As much as I can appreciate you trying to educate me with your limited knowledge there are many things that you do not understand. You have to go beyond Eco 101. While deficit spending may technically keep GDP higher it is something that provides no real value to the economy. As Mr. Easterbrook showed in another article many of the local projects that are funded with federal tax dollars are done with an amazing lack of efficiency.

Paying $1 billion for a $1 million bridge doesn’t make the country better off. It makes the country worse off. We could pay people to break windows each night and others to create and install new ones each morning. GDP would go up, but we would be worse off(though you seem to think otherwise). The resources used for that fruitless activity could have been used to do almost anything that would provide a benefit for the citizens of the country. Instead we devalue the work that is done by those who citizens willingly pay in exchange for that work.

Social Security and Medicare are popular? It depends on how the question is asked in polling. In a question asking whether people would opt out of paying payroll taxes if they also would never get benefits, 60% said they would opt out. Social Security and Medicare are as popular as any program that you will go to jail if you don’t pay into. Seniors rely on those programs in part because they have been forced to contribute to them their whole lives. We do owe the people who contributed to those programs. This doesn’t mean that a tremendous amount of waste does not exist in the programs or in the military. They admit to over $100 billion in waste in Medicare every year. Can’t touch that though right.

Thanks for the “education” by the way. I would take your argument apart more if I had the time or felt the need.

Welcome to class. I will try to educate you both at the same time. Let’s not waste any time.

Obama had the CBO projections before crafting the stimulus bill, but he chose to understate the projections handed to him. He said, in speeches, that we might fall short of potential output by $1 trillion. What the CBO said was that output in 2009 and 2010 would be 6.8% below potential which equals $1.93 trillion ($14.2T economy x .068 x 2 years = $1.93 trillion shortfall). The CBO also gave a range and said the worst case scenario could be three years and a $3T (or more) shortfall).

All of this was written in early 2009 and all of it was given to Obama. So why he believed the economy might fall $1 trillion short is strange and why he thought a GOP-shrunk $700B, tax-cut-heavy stimulus would be enough to solve a $2 trillion (or potentially $3 trillion problem) is just really hard to fathom. Here’s your evidence, by the way:

http://www.cbo.gov/ftpdocs/99xx/doc9957/ 01-07-Outlook.pdf

As for your second point about growth and government spending? Well I think you lack the rudimentary understanding of output and GDP (don’t worry, so does Easterbook… a few posts back he stupidly tried to make a case that government spending doesn’t translate to GDP when, in fact, government spending is PART of the GDP equation). To wit: Y = G+I+C+NX where:

The G in the GDP equation above AUTOMATICALLY runs counter cyclical to investment and consumer spending (meaning, basically, the “private economy” as you put it).

But why does government spending automatically run counter cyclical to the private economy? Because when the “private economy” goes into a recession, tax receipts (government income) automatically falls because everyone’s making less money (and some unlucky souls aren’t making any money at all). BUT, government expenditures AUTOMATICALLY rise to handle things like unemployment insurance and the concurrent increased demands made on public institutions by the newly out of work and the poor (who are always more adversely affected in any recession). All of this is fact. All of this is smart. And all of this is something that all responsible governments have understood and have done for nearly a century to offset the naturally cyclical nature of capitalism.

So now that you understand that government spending automatically runs counter cyclical to the “private economy”, doesn’t it follow that when the “private economy” tanks to such a remarkable degree as it has in this recession that the government should spend equally to meet the shortfall? Of course it does! Thanks for playing…
The Fed always tries to pump vast amounts of money into the economy via the fed funds rate during every recession and, since the 1940s, this policy has usually been sufficient to bring us out. But now that the fed funds rate has been at zero for three years shouldn’t the government spend more money since we’re clearly facing extraordinary circumstances? I’ll answer that question for you AustinG; Yes. Yes, the government should spend even more money.

Now I can hear you and Easterbrook going insane on the whole “wasteful government spending” line of wingnut baloney after reading that last paragraph, but please remember that standard economics says it really doesn’t matter where the money goes when you’re in a depression and monetary policy (the fed funds rate) has proven ineffective… hence John Maynard Keynes’ money hole theory. Look it up.

However, even if we accept that I think I can fisk your “wasteful government” spending line of baloney anyway.

The federal government spends 70% of its money on Medicare, Medicaid, Social Security and the Military (again, look it up). The first three are enormously popular programs that everyone loves and that will never be cut. The last one is an enormously popular program that conservatives love that will never be cut either.

But what this means is that the federal government is not comprised of an army of bureaucrats stealing your money (like wingnuts would have you believe). Instead the federal government is basically an insurance company with an army attached to it. Try to remember that before penning anti-government screeds in the future. There is simply very little available to be cut from federal government spending. Very little. And right now you should WANT them to spend as much as possible on anything they can, wasteful or not.

Finally, as for the state governments going bankrupt thing you talked about? Now that I’ve educated you to the “counter-cyclical” thing, maybe you see that the state governments’ tax receipts fell precipitously at the same time that they needed to take care of an army of newly poor?

But I don’t think your argument holds water even with that. So now I think now it’s your turn to provide proof that the state governments were horribly mismanaged and were going bankrupt. As a person very familiar with municipal bonds I can tell you that you’re going to have trouble supporting your thesis about widespread local and state municipality bankruptcies. And that should be impressive in and of itself no? That even in the worst recession you or I will ever see in our lifetimes (fingers crossed) the states haven’t gone bankrupt. I think that’s impressive.

]]>By: Chivelryhttp://blogs.reuters.com/gregg-easterbrook/2011/09/29/how-to-fix-the-flatline-economy/#comment-3502
Mon, 03 Oct 2011 22:19:59 +0000http://blogs.reuters.com/gregg-easterbrook/?p=1066#comment-3502Oil is a nice place to start.. but “bubble” is better. A “bubble” is needed=opposite of Flagnation. Energy as a whole, including Oil, would be my guess as a “only bubble strong enough”, via reducing costs dramaticly enough to get another 20 year+ expansion.

A truely remarkable.. marketable sector is needed or costs to produce drop heavily.

Since obstruction to any sector seems inevitable, an Energy policy getting Fusion or huge improvements in Solar effeciency seems to be out of the question. I keep my fingers crossed though and pray, for something in Americas future, other than a new FASB standard, new Dirivitives, War, massive inflation, new currency ect..

Need something bigger than optimism, something Infrasturally obviously a game changer.. adding value inherent. And not 100 year payment plans for home loans Briton, or doubling ratio of of debt to GDP Japan.

Pray folks, pray. Other wise look forward to the North American new currency.